Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Thought provoking diary!  Thanks andre.

Off the cuff ruminations ....

The rigidity and bifurcative (Exclusive Or) essence of the neo-lib argument is striking.

"The Road to Serfdom" -- the title of Hayek's book, as if there is only one

Ignoring what doesn't fit.

"the state cannot adequately plan an economy" -- oh really?  The US economy in World War II was unable to produce the munitions needed by its armed forces?  My point: under certain circumstances the State can adequately plan an economy for a certain period of time.  In fact, one can make the argument the basis of the post-war expansion was the capital garnered, through deferred consumer consumption, during the enforced restriction of consumption as well as the higher level of demand over a short period of time for those consumer goods 'kicked' the US economy into a virtuous postivie feedback loop.  Additionally, the Marshall Plan - more State intervention - led to a virtuous cycle in Europe as well as increased demand for industrial goods from the US -- due to its factories were not bombed.

The point here is narrow: under war and post-war conditions the State can achieve Public Goals through central planning.  Thus the general statement, made above, is false.  

Myth of the Rational Actor

This is as exploded as a theory can be.  Notice, tho', the Exclusive Or:  Rational XOR Irrational.  In fact human decision making is a convoluted, complex, process even when confined to its purely cognitive aspects.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Mar 18th, 2007 at 12:34:07 PM EST
Exactly.  The idea that the FED/IMF/World Bank/Other financial institutions are not central planners is ridiculous, yet this is what is spouted by the right all the time.  The myth that the Fed is mostly reactive and value-free (that is, free markets are natural systems) is preposterous.  Yet again, this is what we are led to believe (in the U.S.).  Like our elections, markets are horse races where survival of the fittest prevails.  Money, influence, social relations, class issues do not (for the media) exist, and therefore they are absent from the neoliberal psyche.

Hence, many people end up thinking that programs and planning bring failure...but this leads to another discussion of planned failure à la FEMA, or social security since Reagan, where government spending (in certain arena of social importance) is manipulated to make government seem either incompetent or burdensome.  The social costs of not investing (or the benefits of investing) in this spending is NEVER discussed.

by andrethegiant on Sun Mar 18th, 2007 at 02:13:35 PM EST
[ Parent ]

Is this planning or embroidering?

Wolfowitz Takes Actions to Gear Up World Bank for Iraq
Inside Sources States Board Members Opposed


The unilateral appointment of a resident Iraq country director can only aggravate an already tense standoff between Wolfowitz and the Bank Board. Members of the Board have already expressed concerns about misuse of other donors' funds in the country and emphasized to the US-appointed President "...the need for compliance with the Bank's fiduciary and safeguard requirements," also according to the ISN 2005.

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Mon Mar 19th, 2007 at 08:50:38 AM EST
[ Parent ]
How surprising!  Actually, how predicable.  Here's a preview of Harvey's thoughts on the WB/IMF/Treasury complex:

As Indonesia's GDP fell and unemployment surged, the IMF stepped in to mandate austerity by abolishing subsidies on food and kerosene.  The riots that followed 'tore the country's social fabric' apart.  The capitalist classes, mainly ethnic Chinese, were widely blamed for the debacle.  While the wealthiest Chinese business elite decamped to Singapore, a wave of revenge killings and attacks on property engulfed the rest of the Chinese minority...The standard IMF/US Treasury explanation for the crisis was too much state intervention and corrupt relationships between state and business ('crony capitalism').  Further neoliberalization was the answer.  The Treasury and the IMF acted accordingly, with disastrous consequences.  The alternative view of the crisis was the impetuous financial deregulation and the failure to construct adequate regulatory controls over unruly and speculative portfolio investments lay at the heart of the problem.  The evidence for the latter view is substantial:  those countries that had not liberated capital markets--Singapore, Taiwan, and China--were far less affected than those countries, such as Thailand, Indonesia, Malaysia and the Phillippines, that had.  Furthermore, the one country that ignored the IMF and imposed capital controls--Malaysia--recovered faster.  After South Korea likewise rejected IMF advice on industrial and financial restructuring, it also staged a faster recovery. (Harvey 96-97)

But who would ever think the World Bank or the IMF could be instruments of repression? </snark>

by andrethegiant on Mon Mar 19th, 2007 at 09:21:05 AM EST
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And as for all the talk about the rational actor, I agree too.  It is amazing how much time economists will invest in this issue despite all the problems.  Should we say that economics might just sometimes be ideological rather than scientific?  Not always, but sometimes, and especially when pet theories are trotted out.
by andrethegiant on Sun Mar 18th, 2007 at 02:17:09 PM EST
[ Parent ]

Should we say that economics might just sometimes be ideological rather than scientific?

I think this has been one of the main tunes of ET over the past year - the decryption (and description) of the ideological code that underpins so much of today's political discourse.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Mar 18th, 2007 at 02:31:37 PM EST
[ Parent ]


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